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Back to Basics: Solar Tax Rebates and Grants

Tuesday, May 18th, 2010

One of the factors that make solar energy panels affordable today are the widespread availability of solar tax rebates and grants. These financial incentives provide a significant amount of money to people who install solar panels, and can be used to cover a large portion of the costs.

There are basically three sources of solar tax rebates: federal, state and local. The federal government offers a variety of tax credits that you may qualify for when you install solar panels. Programs such as the Residential Renewable Energy Tax Credit can provide a tax credit of up to 30 percent for systems placed into service before December 31, 2016.

Here in Maryland, there are two different types of grants that you can receive based on the type of system you install. If you install a solar thermal system (also known as solar hot water), you can receive a grant for up to 30 percent of the cost up to a maximum of $2,000. If you install a solar photovoltaic system, the size of the grant you can receive is based on the size of the system you install. According to the Maryland Energy Administration, there are three different grant levels:

$1.25/ watt for the first 2,000 watts of capacity
$0.75/ watt for watts 2,001 – 8,000
$0.25/ watt for watts 8,001 – 20,000

Your system must be under 20kW to be eligible; maximum grant amount is $10,000.

(Please note, as of August 23, 2010 the Maryland Grant Program has changed – the grant shown above are the old grant levels. To learn more about the updated grant visit our Incentives & Rebates page)

Locally, tax credits vary widely from county to county. Here in Maryland, only residents of Anne Arundel County, Harford County, Howard County, Montgomery County and Prince Georges County can receive some form of tax credit for installing solar panels. Check out this page on the Maryland Energy Administration’s website for a quick summary of each county’s program as well as links to more specific information.

When you add up all these tax credits and grants, you could install a solar panel system for about half of the initial cost. And that doesn’t even include the money you receive from Solar Renewable Energy Credits (more on those in a later post).

Want to estimate how much you’ll save by installing solar power? Check out our Solar Savings Calculator!